Virgin Australia has expressed relief that the federal government will not extend a debt guarantee to Qantas, but rather repeal sections of the Qantas Sale Act.

On Monday night, the Abbott government said it would support the repeal of part three of the Qantas Sale Act, which restricts foreign ownership.

''We are very pleased with the outcome which supports fair competition in the Australian aviation market,'' Virgin Australia said.

''We have said many times that we have no issue with the amendment or repeal of the Qantas Sale Act. We will continue to focus on bringing competition to all key segments of the Australian aviation market and growing jobs and services in this country, for the benefit of all Australians.''

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Late on Monday, the Labor Party signalled it would oppose any changes to Qantas ownership in the act.

The repeal of part three of the Qantas Sale Act could send jobs offshore, and the Abbott government, along with Qantas will almost certainly have a fight on its hands with unions.

''If some jobs have to go offshore in order to ensure that Qantas has a strong and viable long-term future, it may be regrettable, but nevertheless it is the best way to guarantee Australian jobs for the long term,'' Prime Minister Tony Abbott said.

Qantas expressed its satisfaction that the government was willing to act on, what the airline called, an unlevel playing field, but called on Labor and the Greens to fall in line.

''We have consistently said that removal of foreign ownership provisions that apply uniquely to Qantas is an important longer term objective to create a fair and free aviation market in Australia. However, it is clear that such a move would have limited chance of passing through the Senate,'' Qantas said.

Qantas said immediate action was needed to address ''Virgin's unlimited ability to access foreign capital from government-owned airlines to fund a loss-making strategy.''

Qantas will likely have to wait until the new senate arrives on July 1.

''Opening a domestic arm to increased foreign ownership would provide an alternative source of equity capital if Qantas so elected, and if in the hypothetical situation that the Government's move was to proceed,'' said National Australia Bank analysts.

''However it should be noted Qantas has hardly been an enthusiastic issuer of equity over the past five years. Indeed it hasn't issued equity in any material size over that period, quite the opposite in fact – it was net buying shares back in financial year 2011 and financial year 2013.

3 Mar
The Prime Minister wants to repeal the Qantas Sale Act, but says the airline would remain majority Australian-owned under other legislation. He rules out providing a debt guarantee for the airline.